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Introduction to accounting ratios

Many organisations publish financial statements. A range of stakeholders use these statements to analyse organisational performance. Internal auditors will also find these statements useful for audit engagements - as part of fieldwork and supporting engagement opinions.

Internal (and external) auditors are naturally interested in knowing whether the financial information provided by the organisation is an accurate reflection of its financial health. They also want to ascertain that the statements do not conceal problems, whether through poor accounting techniques or deliberate attempts to mislead. Basic analysis of financial statements, such as whether sales have gone up or net profits have gone down, will provide some useful information. But more insightful information can be gathered through ratio analysis. Such analysis provides a fairly simple means of examining the financial condition of an organisation. In turn, this can help focus limited time and resource to particular areas, thus supporting a risk based approach.

This course will help you analyse financial data and, more importantly, understand how to interpret this analysis to form useful conclusions about an organisation.

Who should do the course?

  • Internal auditors who want to understand how to use and interpret accounting ratios in their audit work.

What will I learn?

After completing the course, you will be able to:

  • appreciate the importance of financial results to organisations;
  • recall different user groups (stakeholders) interested in financial data;
  • explain the use of accounting ratios to analyse organisational performance and for competitive benchmarking;
  • identify and use accounting ratios to analyse profitability, efficiency and liquidity;
  • calculate accounting ratios from given financial statements;
  • assess organisational performance using accounting ratios and appropriate comparative information;
  • suggest further internal audit work indicated by an analysis of financial statements; and
  • explain the limitations of financial statements and accounting ratios in providing information on organisational performance.

What will I do?

The course comprises a topic and a quiz. You will be recorded as having completed the course when you have worked through the topic and reached a minimum grade of 80% on the quiz. You can download your certificate of completion and a course summary when you have successfully completed the course.

You have three months to complete the course; however it shouldn’t take you more than two hours to do.

Pre-requisite knowledge

The course assumes you have an understanding of:

  • the content and presentation of financial statements, and
  • accounting and auditing controls for finance.

Technical requirements

The course is wholly online so you need access to an internet-enabled device.

CPE competency areas covered

  • Internal audit delivery
  • Critical thinking

2 CPE points

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Standard Member £40.00 ex. VAT
Standard Non-Member £80.00 ex. VAT

Please note: access to our online training courses is for 90 days from the date of purchase. After successfully completing your course, you’ll be able to download the course summary to keep and refer to in the future. You will also receive a CPE certificate.

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